UK stocks fell one per cent by Tuesday lunchtime, trading at levels not seen in two weeks, as heightened tensions in Ukraine and fears about steep valuations prompted investors to scale back risk.

The FTSE 100 was down 0.96% at 6,559 by midday; it has not closed lower since March 24th when it finished the session at 6,520.39.

World leaders have expressed concerns with recent developments in eastern Ukraine overnight after pro-Moscow protesters stormed government buildings and called for their own referendum on independence. Ukraine's government has accused Russia of instigating the protests, while a White House spokesman said that "outside forces, not local forces, were participating on the effort to create these provocations".

The Russian Ministry of Foreign Affairs warned Ukraine of a civil war if it continues to amass forces in the south-eastern part of the country in order to counteract anti-government protests.

Meanwhile, US markets fell sharply again on Monday evening with the Nasdaq registering its worst three-day skid since late 2011 as investors continue to question steep valuations of high-growth tech stocks after their recent run and ahead of the first-quarter results season. Aluminium giant Alcoa will be in focus when Wall Street opens later on as it unofficially kicks off earnings reporting after the close.

Markets in Asia were mixed overnight after the Bank of Japan decided to hold on current monetary policy despite worries of the effects of a new sales tax increase on the Asian economy. The Japanese central bank chose to keep interest rates unchanged and maintained its pledge to increase the monetary base at an annual pace of 60tn to 70tn yen (£351bn-£409bn).

In economic data this morning, the Office for National Statistics said that UK industrial production grew by 0.9% in February, expanding by 2.7% when compared with last year. The figures beat the consensus estimates of 0.3% and 2.2%, respectively.

Investors will be keeping an eye out later on for the International Monetary Fund's World Economic Outlook, in which it is expected to unveil an increase to global growth estimates on the back of economic expansion in the UK and US.

Sports Direct drops on Ashley share sale

Sporting goods retailer Sports Direct sunk sharply after it was reported that Founder Mike Ashley is selling £200m-worth of shares, taking his stake from 62% to 58%. Goldman Sachs said it will place up to 24m shares acquired from MASH Holdings, Ashley's investment vehicle, with institutional investors. The stock is being placed at 850-870p a share, compared with last night's closing price of 893.5p.

Supermarket rivals Tesco, Sainsbury and WM Morrison were all off shopping lists today after Kantar revealed that the companies, which account for three of the 'Big Four' grocers in the UK, suffered further reductions in their market share in the 12 weeks to March 30th.

Mining companies were among the best performers on rising metal prices but had trimmed gains by midday. The FTSE 350 mining index, which rose as much as 1.6% early on, was trading just 0.2% higher, although heavyweights Fresnillo, Randgold and Rio Tinto were still trading in positive territory.

Iron ore producer Ferrexpo, however, had fallen into the red despite a strong start after saying that first-quarter iron ore pellet production rose 9.2% to 2,714,000 tonnes.

Barclays was lower after reaching a settlement with a UK care operator over claims the bank mis-sold products linked to benchmark interest rates. HSBC, RBS, Lloyds and Standard Chartered were also unwanted this morning.

Costa, Premier Inn and restaurant owner Whitbread fell as it continued to pull back after hitting an all-time high in late February. The stock, which has fallen 9% since then, was rated a 'buy' at Galvan Research and Trading this morning, which recommended investors to "pick the stock up in the run up to the full-year results at the end of the month".

Chemicals business Synthomer sunk after JPMorgan Cazenove downgraded its rating on the stock from 'neutral' to 'underweight', saying that the 40% run over the last 12 months is "an opportunity to take profits".

Similarly, pharmaceuticals group Hikma was also hit by a UBS ratings cut from 'buy' to 'neutral' on valuation grounds, saying that it is "time to take a pause and breathe" after the stock's recent performance.

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